Poor people donate more money than upper middle class in U.S., and feel wealthier, studies show

Giving away money, time, surest way to feel richer, U.S. studies show

If the old verbiage is true that time is money, then new research suggesting worries about not having enough time or enough money can be alleviated by simply giving them both away is rather comforting. In their upcoming book, Happy Money: The Science of Smarter Spending, co-authors Michael Norton of Harvard Business School and Elizabeth Dunn of the University of British Columbia say spending money on others not only makes the giver feel happy, but can also foster more positive emotions about one’s personal wealth.

“For the first time, we show that giving away money or spending it on others confers the ironic psychological benefit of increasing the giver’s sense of wealth,” says Norton and Dunn.

Here’s one reason to smile. A new report shows that the happier your childhood, the more money you’ll earn later in life.

In a study of 10,000 Americans, University College London and London School of Economics professor Jan-Emmanuel De Neve and University of Warwick economics professor Andrew Oswald found that happier people go on to earn more money. In particular, adolescents and young adults who experience a positive upbringing or higher life satisfaction at age 16 and 18 earned more income by age 29.

The report, published last month in the journal Proceedings of the National Academy of Sciences of the United States of America, was presented this past Friday at the American Economic Association’s annual meeting.

In their analysis, they also found evidence to explain why wealthier, middle income individuals tend to be more stingy with their money than their poorer counterparts.

In one of their studies, they found that Americans who earned less than $20,000 a year, tend to donate more of their money than those earning up to $300,000 a year.

“Our results suggest when the poor give money away, that very act might mitigate their feelings of poverty,” Norton said. “More broadly than this specific benefit, our investigation contributes to the growing body of research documenting the benefits of prosocial behavior, which include greater happiness, reduced mortality and better immune function.”

If this isn’t enough to rouse your inner philanthropist, Norton and his colleagues also conducted related research showing money isn’t the only thing that can be stimulated through good deeds. In an article published in Psychological Science, researchers found that volunteering time, to help a neighbor or a friend can also posit some good vibrations from both parties.

Norton says, whether you are helping with homework or shoveling a driveway, dedicating some personal time to help a loved one actually makes you feel like you have more time.

“In fact, giving time away alleviates people’s sense of time famine even more than receiving unexpected windfalls of free time.”